Minnesota Employment Law: Non-Compete Agreements

On Behalf of | Apr 18, 2023 | Business Law

Agreements that restrict employees from participating in competitive activities and adjuration of company business during one’s time of employment and after employment have been commonplace in Minnesota. These agreements can be universal in many industries.

While many Minnesota employees may view non-compete agreements as troublesome, employers view it is a practical way to protect the business they have established. Non-compete agreements can also be used to protect the remaining employees and confidential workplace information.

It is not a fact that a non-compete agreement cannot be enforced against an employee and block the employee from finding a new job with a company that is a competitor. If an employee agrees to sign a non-compete agreement that has been deemed valid, it could very well be enforced against the employee after the employee has agreed to accept a position with a competing business.

On the other hand, if the employee does not accept a position with a competitor of a former employer and the actions taken do not result in any damages to the former employer, it is not likely that the signed non-compete agreement would stand. Not every non-compete agreement will be flawless and valid; there are several factors that can result in the non-compete agreement being flawed.

It is important to discuss a non-compete agreement with a Minnesota employment lawyer before agreeing to sign the agreement. It will also be beneficial to an employee to discuss the signed non-compete agreement with an employment lawyer before accepting a position with a new employer if there are concerns about the new position.

While non-compete agreements may not be the most favorable documents that are signed during employment, they can certainly be viewed as enforceable. How is it determined if the non-compete agreement is enforceable?

Generally, the court will perform a balancing act against the interest of the employer and the employee’s right to earn an income. The non-compete agreement will be viewed as valid the interest of the employer weighs more than the employee’s right to be employed an earn an income.

How Is An Enforceable Non-Compete Agreement Drafted?

Across the United States, the laws involving drafting a non-compete agreement will not be the same. A non-compete agreement that is viewed as enforceable in one state may not be enforceable in the next state over. This is why it is so important to understand the laws in Minnesota. Non-compete agreement contract forms there are found online and printed may not be acceptable for employers and employees in Minnesota.

When a non-compete agreement is drafted, it involves a process of including various Minnesota laws that will ensure the contract can be viewed as enforceable. Non-compete agreements in Minnesota that are written properly will generally be enforced. However, the non-compete agreement can be voided if there are errors in the non-compete agreement.

A Valid Non-Compete Agreement

In order to determine if a non-compete agreement is valid, there will be a review of the facts on a case-by-case basis. In Minnesota, the courts will determine if the employee was given consideration for the agreement. What does this mean? Consideration, specifically adequate consideration, refers to the value bargained by the two parties.

If a non-compete agreement is signed at the start of one’s employment journey, the promise of a position with the company could be enough to create a valid non-compete agreement. What if the non-compete agreement is signed after the start of one’s employment journey? In this case, the non-compete agreement will only be valid if the non-compete agreement included supplementary consideration, such as money.

Is The Agreement Protecting The Interest Of The Business?

After determining if the non-compete agreement is valid based on adequate consideration, the courts in Minnesota will evaluate the non-compete agreement to determine if the agreement is used to protect the interest of the business. If the non-compete agreement has been put in place to protect the business and/or the employer, the non-compete agreement can be viewed as valid.

Some business interests that can be protected by a non-compete agreement include the prevention of discussing sensitive information or disclosing trade secrets. Non-compete agreements may also be used to protect particular investments, strategies, or training tools that are used in the workplace.

In order for the non-compete agreement to be valid, the employer will need to prove that the employee was equipped with enough tools and training. In every case, the court will need to determine that the employer’s business could be damaged beyond repair if the interest of the business is not protected before the non-compete agreement can be upheld.

What If The Non-Compete Agreement Is Too Broad?

If a court determines that the non-compete agreement is too broad or more extensive than necessary to protect the interest of the business, the agreement can be voided. However, under the blue pencil doctrine, a court can take the broad restrictions and enforce the non-compete agreement to the extent that the agreement is reasonable. If a non-compete agreement states that an employee cannot work across the globe, the court may make a change to the contract and limit it to only the state of Minnesota.

When discussing non-compete agreements and cases, the courts will decide will either motion in favor of an injunction or a restraining order. The courts will determine if the employee can be stopped from being involved in activities that may be viewed as competitive. In some cases, the employee will be awarded damages.

What will happen if the employer makes the decision to file a lawsuit against the employee in an attempt to have the non-compete agreement enforced? If this is the case, the case could eventually go to trial. However, the majority of lawsuits will not have to go to trial because they can be settled out of court between both sides.

If you have a non-compete agreement that needs to be reviewed, contact Villaume & Schiek and allow us to review the agreement. We will determine if the non-compete agreement you have signed is valid or if you can use the agreement to request a waiver. If you have been told that you have violated the agreement and there is a possibility a lawsuit will be filed against you, please contact us today so we can help you understand your legal rights and your options.

Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.